Divorce Florida Style
Q: I am fifty-five years old, and have been working for the same chain of hotels for most of my thirty-year career. I started at the registration desk, and now manage a resort hotel in south Florida.
I have been paying into a 401K since I started. My employer based the 401K on my voluntary contribution and a small match. Shortly after I started, I was notified that the 401K had been revised to the type of plan, which allowed me to make investment choices, from time to time.
Through the years, with the advice of investment advisors, I occasionally changed my investment portfolio to keep up with the economic times, and remain diversified. The account was reasonably successful. Even after the recent down turn, I have well over a million dollars in my account.
When I was fifty, I married for the first time. During our five-year marriage, I continued to change my retirement portfolio each year during the “open periods”, upon the advice of my investment advisor.
Now I am a fifty-year-old man with many things I never had before: a house, a two-year-old daughter, and a young wife who is divorcing me and trying to take a fifty percent interest in my entire 401K. Her lawyer claims that because I personally invested my account the whole account is marital.
My lawyer thinks we can defeat the claim in court, and that her only interest in the plan would be based on contributions during the marriage, and the growth of those contributions. Since the 401K plan represents my only savings, and my security I am very concerned in the outcome. What are my chances of defeating her claim?
A: The issue for the judge to decide, as framed by your Wife’s lawyer’s claim, appears to be whether or not your expenditure of “marital labor” spent in investing your 401K account was substantial enough to have converted some or all of that account from being non-marital property to marital property.
The account now has two separate components; the sums that you invested before the marriage, and its growth, and the sums you invested after the marriage, and its growth. There is a strong presumption that your wife has no interest in the sums you deposited before the marriage. The funds that you contributed to the plan after the marriage and its growth are marital.
If, during the marriage you spent a substantial amount of time in your formulation and execution of investment decisions concerning your entire 401K, your wife might have a valid claim in the appreciation of the entire account during the marriage. However, it is not likely that she could convert your entire 401 K into marital property.
Claims of this nature can be made with regard to retirement or non-retirement accounts. Your wife and her counsel will have burden of proof to establish that the marital labor, and not market conditions caused the run-up in the value of your account after the marriage.
To meet the burden of proof they would have to show the amount of time and effort you took in making your investment decisions; IE. Did you study the individual investments offered, or merely take the advice of your advisor. Did you make few changes or many changes?
Your account changes were limited to those offered by the plan, and you state that you relied upon your investment advisor. You have not indicated any unusual amount of time spent in making these regular adjustments. If all that is true, your wife’s interest in the accounts will probably be limited to the amount that you contributed during the marriage, and its appreciation.
Michael H. Gora has been certified by the Board of Specialization of The Florida Bar as a specialist in family and matrimonial law, and is a partner with Shapiro Blasi Wasserman & Gora P.A. in Boca Raton. Questions may be submitted to Mr. Gora at mhgora@sbwlawfirm.com.
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